City slots bidders get two-month extension

Annie Linskey, The Baltimore Sun

State officials agreed Wednesday to extend the bidding deadline for the Baltimore slots license by nearly two months, a move that delays the selection process until after the city's contested mayoral primary in September.

The vote by the Maryland slots commission came hours after Mayor Stephanie Rawlings-Blake unveiled a proposal to use revenue from the planned casino to reduce property taxes for city homeowners. A spokesman for Rawlings-Blake said the delay should not affect the proposal.

Commission members said pushing back the deadline would give its staff more time to answer technical and legal questions from developers who are considering bidding on the license.

Donald C. Fry, chairman of the slots commission, said there is a "strong showing" of "very interested parties."

"There have been very meaningful questions raised, and we have to be able to give meaningful answers," Fry said. "We just think this delay will do nothing but improve the chances of receiving qualified bids."

The decision to move the deadline from July 28 to Sept. 23 is the most recent twist in a long and so far fruitless search for a developer to run a slots casino in Baltimore.

Officials had hoped the slots parlor would open — and begin pumping revenue into city and state coffers — this year. Authorized for 3,750 machines, it would be the second-largest of the five casinos approved by Maryland voters in 2008.

But the first round of bidding for the license two years ago yielded one applicant.

Canadian homebuilder Michael Moldenhauer proposed a 500-machine slots casino for the site on Russell Street near the sports stadiums. Officials rejected his application after losing faith that his group could come up with the cash to back a larger facility. He has sued the city and the state.

The later deadline could benefit Rawlings-Blake, who faces several challengers in the Democratic mayoral primary Sept. 13. Analysts say it will help her avoid political embarrassment during the campaign in the event that no developer comes forward with a viable bid.

"The biggest issue she has to deal with is governance," said Lester Spence, a political scientist at the Johns Hopkins University. "If there were no bids, or if they were all really bad, it could be part of a broader strategy to say, 'We have somebody in the mayor's office who doesn't have the qualifications to be there.'"

Earlier Wednesday, Rawlings-Blake announced plans to use casino revenue to cut property taxes for city homeowners by 9 percent over nine years.

Spokesman Ryan O'Doherty said the delay should not have any "significant impact" on the mayor's plan to reduce the property tax rate, noting that her proposal does not rely on slots revenue in the first year.

"We are very confident that the Baltimore slots site will be successful and generate revenue to reduce property taxes in future years," O'Doherty wrote in an email.

Fry said the mayoral race was not a consideration in the decision to push the bid deadline back.

"This is a state issue," the commission chairman said. "Our primary interest is what is in the best interest of the state."

Robert Howells of the State Lottery Agency said potential bidders for the Baltimore slots license have submitted about 70 written questions. He characterized the inquiries as "very technical" and "very thoughtful," and said the answers yield new questions.

"It is difficult to cut off questions," Howells said.

Fry said the two-month extension would likely have little impact on the opening date for a casino and that he remains optimistic that the panel will award a license by early next year.

Bidders are required to write a check for $22.5 million — an amount that for most groups necessitates the backing of a gambling or investment firm.

Only two of the five slots casinos approved by voters have opened. In their first months of operation, revenues at the Hollywood Casino Perryville in Cecil County and at Ocean Downs near Ocean City have fallen short of expectations.

A third casino is under construction at Arundel Mills mall. The state is looking for a developer to run a fourth at Rocky Gap in Western Maryland.

The new deadline for Baltimore bids is also the day that proposals are due for Rocky Gap. That project is in its third round of bidding.

The Baltimore license poses a specific challenge: The winning bidder must accept terms laid out by both the state and the city.

The winner of the Baltimore slots license would be required to give the city 2.99 percent of the profits on top of the 67 percent of revenue the state is collecting from the other large casinos. (Officials reduced the rate this year on Rocky Gap in the hope of attracting bidders.)

Potential bidders for the Baltimore license have criticized the requirements.

A new wrinkle arose this month when Moldenhauer filed a federal lawsuit alleging that requirements for minority- and women-owned business participation discriminate against companies owned by white men.

Developers say meeting the requirement has been challenging because there are a limited number of minority-owned firms in the gambling industry.

Fry said it is "too early to tell" whether the Baltimore bid specifications will be changed.

Local developer Jim Seay, who attended the commission meeting with partner Patrick Turner, said their group hopes that the state will use the deadline extension "to make the overall business model more attractive to the investment community."

Turner and Seay are well known in Baltimore's business circles: Turner built the gleaming Silo Point luxury condominiums in Locust Point.

Seay owns Premier Rides, a company that builds amusement park rides and attractions. He went to Asia recently on a trade mission led by Gov. Martin O'Malley.

"Our local development team which includes MGM was certainly working diligently toward the anticipated submittal date," Seay wrote in an email. "Our team has invested significantly in the process in both time and expense."